The gold rush to emerging pharma markets may come with an ironic twist. Just as the world's biggest branded drugmakers set their sights on developing countries, analysts are expecting those same countries to put generic drugs at the top of their lists. As those emerging nations grow their middle classes, healthcare will no doubt grow faster than GDP. But "they're not going to go to branded drugs first," Les Funtleyder of Miller Tabak & Co. told Investors' Business Daily. "They're going to go to generic drugs because they're cheaper and just as dependable."
No surprise, then, that generics deals are the latest acquisitions to make. Take Watson Pharmaceuticals' recent deal for Arrow Group; though the latter's business is now centered on U.S., France, Canada and the U.K., it has products registered in emerging markets such as Slovakia and Turkey, which is where Watson is expected to push. Citi Investment analyst John Boris said he's expecting Watson to expand into Brazil as well as Central and Eastern Europe.
Meanwhile, the analysts are expecting more drugmakers--branded and otherwise--to look for generics deals. Teva Pharmaceutical Industries is already scouting for a "major" acquisition. Funtleyder predicts that Sandoz, Novartis' generics unit, will do some buying in generics, too. And he said that as branded drugs go generic, more drugmakers will follow suit.
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